China's top airlines may return to profit this year

SHANGHAI, April 17 - China's top three airlines, which lost more than $4 billion in 2008, may return to profit this year as a faster-than-expected rebound in domestic air travel in the first quarter could extend through the year.

After years of double-digit growth, China's airlines faced strong headwinds last year as a series of natural disasters and a slowing economy hit demand for air travel.

But air traffic has resumed its normal growth pattern this year, as Beijing's aggressive stimulus package to bolster economic growth lifted consumer confidence, boosting travel.

Flag carrier Air China, which reported a 9.15 billion yuan ($1.3 billion) net loss last year under Chinese accounting standards, was profitable in the first quarter. [ID:nHKG306793]

Loss-making China Eastern Airlines and China Southern Airlines, due to release quarterly figures later this month, are expected to see positive results, analysts said.

(Reuters)

Airbus to sign deal with China for A350 composite

MADRID, Jan 29 - European Aerospace Group EADS will sign a deal with Chinese firm Avicopter on Friday to build a factory producing carbon-fiber composite for its new A350 jetliner, the Spanish government said.

The joint venture agreement to build a plant in the Chinese city of Harbin will be signed during a visit to Spain by Chinese Prime Minister Wen Jiabao. Spain has a 5 percent stake in EADS, which owns plane maker Airbus.

The A350 will be 53 percent carbon-fiber composite -- a material lighter than aluminum, which is the conventional material used to make a plane's wings and fuselage. That allows designers to increase the number of passengers for the same fuel load.

Friday's formal signing follows the signing of a memorandum of understanding (MoU) between Airbus and China to build 5 percent of the A350's airframe in China and a subsequent agreement to establish a composite factory in Harbin.

China has already signed a deal to locate a final assembly line for Airbus' A320 in the Chinese city of Tianjin.
An Airbus spokesman declined to give further details.

Earlier this month Airbus vowed it would break free of a string of damaging aircraft production delays as it began construction of a factory for the 10 billion euro ($13.08 billion) A350 project -- Airbus' response to Boeing Co's 787 Dreamliner.

(Reuters)

Official opening for China's A320 line in Tianjin

China's Airbus A320 final assembly line at Tianjin is due to be officially opened today (28 September), as production of the first locally built airframe gathers momentum.

The plant, in which Airbus has a 51% stake with the remainder being held by local investors, began assembling its first A320 on 18 August (pictured), with subassemblies supplied from Europe via Hamburg.

(Flight international)

Boeing seals an $6.3bln package with Air China

Boeing Co. said it’s signed a deal with Air China for 15 777s and 30 737-800s.

The deal is worth $6.3 billion at list prices.

Officials at Boeingannounced the deal at the Farnborough air show in the United Kingdom and said the order was previously attributed to an unidentified customer on its website.

Boeing said it has 350 unfilled orders for the Everett-built wide-body 777 and 2,200 unfilled orders for the Renton-built 737.

(Business Journal)

Bombardier seeks greater presence in China

FARNBOROUGH, Brittain - Bombardier Inc. aims to bolster its presence in China, both as a seller and a supplier.

"Bombardier will play an increasing role in China," CEO Pierre Beaudoin said today after signing a long-expected agreement with state-owned China Aviation Industry Corp. (AVIC 1) to build the centre fuselage for the CSeries family of jets.

Bombardier already has 3,000 employees in China.

Over the next 20 years, AVIC estimates the Chinese market will need 3,110 commercial airplanes, including 2,232 for the mainline market and 878 for the regional market.

Bombardier's choice of AVIC was, in part, to improve the company's chances of securing orders from Chinese carriers. Reports circulated that China Southern and Shanghai Airlines will announce orders for the CSeries family of 110 to 130 seat jets.

"We would be very happy to help Bombardier with CSeries orders," Yawei Wang, AVIC's vice president, commercial airplanes, said today at a press confrerence.

Last year, Bombardier announced a preliminary deal with AVIC to supply the centre fuselage for CSeries.

AVIC has pledged $400 million for the program.

At a press conference today, Wang wouldn't give a specific number, saying only that the investment would be in the order of "hundreds of millions of dollars."

AVIC manufactured 90 per cent of the structure of China's 90-seat regional jet, the ARJ21.

AVIC also intends to participate in the building of a larger Chinese jet with over 150 seats.

Beaudoin said AVIC wouldn't be competing against itself by participating in the CSeries program.

(The Gazette)

Embraer Sells Five 190 Jets to China

SAO JOSE DOS CAMPOS, Brazil, July 11, 2008 -- Embraer and Kun Peng Airlines Co., Ltd., one of the main operators in the Chinese regional aviation market, signed a contract for five firm orders for the EMBRAER 190 jet, marking an important expansion of Embraer's presence in mainland China. The total value of this agreement is US$ 187.5 million, at list price.

"We are much honored to have Kun Peng Airlines as our new E-Jets family customer," said Mauro Kern, Embraer Executive Vice President, Airline Market. "We have always been confident in China's regional aviation market expansion, and this is an extremely positive sign in that direction. I firmly believe that our customer-friendly EMBRAER 190 will make a strong contribution to Kun Peng Airlines' growth plans and will please Chinese passengers."

Headquartered in Xi'an City, Kun Peng Airlines is a joint venture between China's Shen Zhen Airline and the Mesa Air Group, from the United States, with the Chinese company holding the larger share. Since its start-up in September 2007, Kun Peng already has more than 20 routes in operation. The new EMBRAER 190 of the Chinese airline will be configured with 98 seats in a comfortable dual-class layout, and the first delivery is scheduled for 2008.

"Introducing the EMBRAER 190 jet fits our company's strategy perfectly, and we believe it will definitely benefit both of us, Kun Peng and Embraer, in our long-term cooperation," said Mr. Zhang Pei, General Manager of Kun Peng Airlines. "Kun Peng Airlines is dedicated to building itself into the most sizable, characteristic, and competitive regional airline in China, to promote the development of the Chinese regional aviation industry, and to contribute to China's harmonious civil aviation progress."

The EMBRAER 190 is one of the four members of the E-Jets family, and entered service in August 2005. On June 30, 2008, the EMBRAER 170/190 family of E-Jets had logged 847 firm orders and 827 options from more than 45 customers in 30 countries, with over 1.5 million flight hours.

(PRNewswire-FirstCall via COMTEX)

China rolls out upgraded regional aircraft

BEIJING: China has rolled out the upgraded version of its regional aircraft, Modem Ark (MA)600, in its quest to be worlds leading maker of turbo-prop regional aircraft.

The 60-seat MA 600, an improved version of MA 60, is 300 kgs lighter than the old model with enhanced energy saving capacity, improved power system, cabin design and trans-ocean flight capacities, the aircraft maker Xian Aircraft Industry (Group) said.

After five years, China would be able to deliver its own turbo-prop regional jet series, featuring MA 60, MA 600 and MA 700 catering to different kinds of end users, company president Meng Xiangkai said.

"The country will strive to be the worlds leading provider of turbo-prop regional aircraft," state-run Xinhua news agency quoted Meng as saying in Xian.

MA60, powered by Pratt and Whitney PW-127J turboprop engines, is Chinas first home-grown regional plane designed and produced according to international standards, it said.

The plane with a maximum speed of 514 kms an hour and a flight range of 2,450 km or four hours was granted the "type certificate" in 2000 with commuter services as its primary role.

The company has received 122 orders, of which 15 have been exported to Africa including Zimbabwe and Zambia.

Research and development on the 70-seat MA 700 has also begun, Lin Zuomin, head of the preparation group for the China aviation industry group corporation said.

(The Economic Times)

Air China buys 20 Airbus planes

• expands capacity 17 pct
  

HONG KONG, June 26 - Air China agreed on Thursday to buy 20 Airbus A330 jets for a nominal $3.821 billion, as the country's largest carrier by market value expands its fleet to keep pace with booming travel.

Air China said in a statement the jets will boost its annual capacity by 16.5 percent -- as measured by available tonne-kilometres -- when compared with capacity in 2007.

Airlines typically get hefty discounts from catalogue prices from airplane manufacturers. Air China did not disclose the discount it won from Airbus.

(Reuters)

China Southern teaming up Air France

HONG KONG, June 3 - China Southern Airlines Co Ltd said on Tuesday it planned to set up a 75 percent owned air cargo transportation joint venture in China with Air Bleu Ltd, a firm controlled by Air France-KLM Group.

The joint venture, which is pending approval from relevant government authorities in the mainland, will be involved in the cargo and mail airline services, ground handling services, operation of warehouses and other storage services, customs clearance agency, and import and export services, the Chinese carrier said.

The company said the investment amount of the joint venture is still being negotiated. It gave no further financial details of the joint venture.

(Reuters)

China's jets to Challenge Airbus, Boeing

May 11-- China set up a company to build large jets, challenging the dominance of Airbus SAS and Boeing Co. in the market for planes with 150 seats.

China Commercial Aircraft Co. was formed today with an initial investment of 19 billion yuan ($2.7 billion), according to a statement on the central government's Web site. Investors in the company include China Aviation Industry Corp. I, or AVIC I, and AVIC II.

China aims to build a 150-seat aircraft by 2020 to support the expansion of its domestic travel market and to compete with Boeing and Airbus overseas. The plan is also part of China's wider drive to develop more sophisticated products, such as ships, cars and computers, to cut its reliance on overseas suppliers.

``This is the dream of several generations and we will finally realize it,'' Premier Wen Jiabao said in the announcement. ``We should rely on ourselves to build the large planes' main technologies, materials and engines.''

Zhang Qingwei has been appointed chairman of the company, while Jin Zhuanglong was named president, the announcement said.

China aims to triple its fleet of passenger and cargo planes to 4,000 by 2020 as economic growth lifts travel demand in the world's second-largest aviation market, according to the General Administration of Civil Aviation.

The State-owned Asset Supervision and Administration Commission will invest 6 billion yuan to become the largest shareholder in China Commercial Aircraft, the 21st Century Business Herald said yesterday. The Shanghai city government will spend 5 billion yuan to take the second-biggest stake, it said.

AVIC I will invest 4 billion yuan, while AVIC II, Baosteel Group Corp., Aluminum Corp. of China and Sinochem Corp. will each invest 1 billion yuan, the Beijing-based newspaper said.

(Bloomberg)

China to deliver two 50-seat MA60 planes to Bolivia

• the total order up to 116

China will deliver two MA60 regional planes to Bolivia in February, the first Chinese aircraft to enter South America, China National Aero-Technology Import & Export Corp (CATIC) said on Friday.

The 50-seat MA60, produced by China Aviation Industry Corp I (AVIC I), has received 116 orders, 86 of which are from overseas. The planes have been delivered to Zimbabwe, Laos, Zambia and the Republic of Congo.

Chinese government is now working on a plan to restructure and consolidate the businesses of the country's two leading aviation manufacturers--AVIC I and AVIC II, aiming to develop its own large commercial airplane. Details of the plan are expected to be announced in March.

CATIC, in which AVIC I and AVIC II each hold 50 percent stakes, handles over 80 percent of the country's aviation imports and exports.

(China daily)

China Airlines buys 20 Airbus A350-900 jets

• the planes will be powered by Rolls Royce engines.

Jan. 23, China Airlines, the largest airline in Taiwan, has inked a contract to purchase 20 Airbus planes, each worth US$230 million by the list price , after signing the letter of intent in December last year.

All the ordered planes are 314-seat A350-900 jets, powered by Rolls Royce Trent XWB engines which includes a long-term TotalCare® services agreement. For Rolls Royce, it is also the first time to been chosen as an engine supplier by China Airlines.

The air carrier said all the planes will be used in the long-distance routes to Europe, Australia and the U.S. starting from 2015.

China Airlines was set up in 1959. It has now 68 planes, including six A340-300 jets and 16 A330-300 jets and 40 aircrafts ordered from Boeing.

(China Knowledge, La Société)

China Eastern rejects Singapore Air deal

• Air China makes purely commercial effort to lobby China Eastern's public shareholders, which would not have taken place a few years ago by state-owned Chinese companies.
• The battle reflects the start of a restructuring of China's airline industry.

BEIJING — Shareholders in China's third-largest airline rejected a bid by Singapore Airlines to buy a minority stake Tuesday after a rival Chinese carrier offered more money in an unusual public takeover battle involving two state-owned companies.

China Eastern Airlines supported the Singapore bid, which would have brought the struggling carrier cash and foreign expertise. But nearly 78 percent of shareholders who voted at a meeting in China Eastern's home city of Shanghai rejected the deal, the airline said.

The rejection was a blow to Singapore Airlines' efforts to gain a foothold in China's booming air travel market, which is expected to become the world's largest in the next two decades.

It came after Air China, another state-owned carrier, made a last-minute public offer to top the Singapore price.

China Eastern chairman Li Fenghua, reading a written statement before reporters, expressed "great regret" at the outcome. He said Singapore was still his company's ideal partner and that it would not consider Air China as a strategic partner. Analysts have said that could lead to China Eastern being absorbed by its Beijing-based rival.

Singapore Airlines said it would make a statement through its country's stock exchange later Tuesday.

The Singapore offer prompted both sides to launch Western-style public lobbying of their minority public shareholders, a radical step for the secretive world of China's major state companies. The battle could reflect the start of a restructuring of China's airline industry.

The market is dominated by three state-owned carriers _ Air China, China Eastern and the biggest, China Southern Airlines _ all of which have sold minority stakes to the public on the Hong Kong and Shanghai stock markets. Regulators have been talking about consolidating them, possibly going so far as to create a single, giant Chinese airline, in order to compete better with foreign carriers.

Still, the Chinese cabinet approved the Singapore deal and the state agency that ultimately owns both China Eastern and Air China said it would let shareholders decide the deal on economic grounds.

Because of that, financial analysts said the Air China bid appeared to be a purely commercial effort by a competitor to increase its control over the China market.

"The SIA deal had the backing of the government, so this really is a domestic action ... by a rival wanting to take over another," said Pete Harbison, chairman of the Center for Asia Pacific Aviation, a consulting group.

Singapore Airlines and its parent, the government investment agency Temasek Holdings Ltd., offered 7.2 billion Hong Kong dollars (US$923.8 million; euro627.5 million), or about HK$3.80 a share for a 24 percent stake in China Eastern.

Air China issued a public statement over the weekend offering investors at least HK$5 per share if they rejected the Singapore tie-up. Air China has a partnership with Hong Kong-based Cathay Pacific, one of the region's most accomplished carriers, which could supply China Eastern with international expertise.

Cathay said Monday it would consider joining a strategic alliance with Air China and China Eastern.

"In a period of four months, CNAC has never directly communicated with the Board and the management of CEA regarding cooperation," it said in a statement Monday.

Trading in China Eastern shares in Hong Kong and Shanghai was suspended Tuesday pending the outcome of the vote. China Eastern shares fell 3.8 percent in Hong Kong on Monday before the suspension.

Trading in Singapore Airline shares was also suspended Tuesday.

The need to win over public shareholders prompted Air China's unusual strategy, Harbison said. He said such a public battle would not have taken place a few years ago.

"It may have happened behind closed doors, but we wouldn't have known about it," he said. "I think Air China realized that if it wanted to convince shareholders then would need to do so publicly."

Associated Press

Timeline

May 10, 2007 -- Singapore Airlines says it has had 10 months of talks with China Eastern but has not reached a decision on whether to buy a stake in the airline.

May 23, 2007 -- An influential Chinese financial magazine reports that Singapore Airlines will take a 25 percent stake in China Eastern for $1 billion.

May 29, 2007 -- Sources say the planned bid by Singapore Airlines is raising concerns within the Chinese government.

September 2, 2007 -- Singapore Airlines and its parent Temasek say they will pay US$920 million for a 24 percent stake in China Eastern.

September 3, 2007 -- China Eastern shares jump 76 percent to a record as trading resumes after being suspended since May.

September 24, 2007 -- Cathay Pacific says it wanted to enlist the parent of its partner Air China to buy a slice of China Eastern but that the deal would no longer go ahead. It does not explain why not.

November 9, 2007 -- China Eastern says Singapore Airlines and Temasek Holdings sign a definitive deal to buy a 24 percent stake in the airline for US$920 million.

December 13, 2007 -- China Eastern says the bid from Singapore Airlines and Temasek Holdings is a "final deal", sending its shares skidding, as investors abandon hopes of a bidding war. China Eastern said it expects to return to profit for the whole of 2007.

January 1, 2008 -- China National Aviation calls the Singapore Airlines bid unfair and too cheaply priced, suggesting the firm will vote against the impending acquisition.

China Eastern and Singapore Airlines insist deal is fair.

January 6, 2008 - China National Aviation vows to pay at least HK$5 per share for between 24 percent to 30 percent of China Eastern, at least 32 percent more than rival suitor Singapore Airlines' agreed HK$3.80 per share.

January 7, 2008 -- Cathay Pacific Airways says it will consider joining China National Aviation Corp (Group) Ltd, the parent of its partner Air China, in a higher bid to counter arch-foe Airline's offer for China Eastern shares.

January 8, 2008 -- Minority shareholders vote against China Eastern's proposal to sell a 24 percent stake to Singapore Airlines and Temasek.